The KOSPI ended slightly lower on the 17th after heavy foreign selling wiped out an intraday gain of more than 1%. Stocks opened strong on a view that concerns over the U.S. Federal Reserve's first rate increase in more than three years — and its signal that further tightening remains possible — had already been largely priced in. But the index turned negative in the afternoon as foreign investors dumped large-cap chip stocks, including Samsung Electronics (005930) and SK hynix (000660).
The KOSPI closed at 6,715.41, down 2.56 points, or 0.04%, from the previous session, according to the Korea Exchange.
The index opened at 6,779.02, up 61.05 points or 0.91%, and rose as high as 6,795.53 in early trading, extending its gain to 1.15%. The Fed raised its benchmark rate by 0.25 percentage point to 3.75-4.00% at its Federal Open Market Committee meeting overnight, but sentiment held up on the view that caution over a resumption of tightening had already been reflected in the market.
It was the Fed's first rate increase in three years and two months, since July 2023. Fed Chair Kevin Warsh kept a hawkish tone, leaving open the possibility of further tightening. The U.S. increase also widened the gap between Korean and U.S. policy rates back to more than 1 percentage point, adding pressure to the domestic market.
The mood reversed in the afternoon as foreign selling intensified. The KOSPI quickly gave back its gains and fell to as low as 6,697.85 at one point before recovering part of the loss by the close.
Foreign investors sold a net 2.28 trillion won ($1.6 billion) worth of KOSPI shares on the day. They have been net sellers for seven consecutive sessions since the 9th of this month, weighing on the index. Retail investors and institutions bought a net 413.7 billion won and 158.7 billion won, respectively. Other corporations — which have emerged as a major force in supply and demand recently on the back of large share buybacks by Samsung Electronics and SK hynix — bought a net 1.7045 trillion won, absorbing the foreign selling.
The foreign selling was concentrated in large-cap chip stocks. Samsung Electronics closed at 252,500 won, down 0.39% from the previous session, while SK hynix fell 0.80% to 1.745 million won. Samsung Electro-Mechanics (009150) dropped 3.69% and SK Square lost 1.18%. Hyundai Motor (005380) rose 0.28%, KB Financial Group (105560) gained 1.41% and Samsung C&T added 0.57%.
With the KOSPI finishing only marginally lower despite the first U.S. rate increase in three years and two months and the prospect of further tightening, market participants said concerns over a hawkish FOMC had been largely priced in. Still, with foreigners extending net selling to a seventh session and unloading shares mainly in large-cap chip names, whether foreign buying recovers is seen as the key variable for the index's direction.
The KOSDAQ was relatively firm, closing at 822.18, up 6.20 points or 0.76%. Institutions bought a net 44.8 billion won on the KOSDAQ, while foreign and retail investors sold a net 33.7 billion won and 25.1 billion won, respectively.
Major Asian markets were mostly modestly higher. Japan's Nikkei 225 rose 0.33% to 64,136.25, and Taiwan's Taiex gained 0.96% to 46,288.00.
